By Richie Lennon
A limited company can contribute to a director’s PRSA, but employer contributions are no longer unlimited for tax purposes. From 1 January 2025, the usual annual employer limit is 100% of the director’s salary from that company. Excess contributions can create a taxable benefit and lose the company’s deduction. Plan the salary limit, the payment date and the business cash together. A company pension payment is different from a personal contribution and needs its own calculation.
The old “put unlimited company profit into a PRSA” advice is out of date. That is not a minor wording change. Acting on it can leave both the director and company with tax consequences they did not expect.
Our starting point is the amount the business can afford to commit, followed by the rules for the chosen pension arrangement. A pension allowance is not a recommendation to empty the bank account.
What is a PRSA?
A Personal Retirement Savings Account is a personal pension arrangement into which an individual and their employer can contribute. It stays with the individual when they change employment. A company director can hold one, but the company’s payment is an employer contribution, not a dividend or a personal withdrawal.
Different products have different charges and investment choices. Revenue’s PRSA overview explains the tax framework. Product suitability and investment advice need a regulated pension adviser.
The salary limit applies to the employer's payment
From 2025, the usual limit is the employee’s actual emoluments from that employer in the calendar year. It is not the company’s turnover, profit or an annualised salary rate when someone worked for only part of the year. Specific statutory exceptions apply to certain absence situations. Finance Act 2024 introduced the limit.
For a director receiving €60,000 of salary from the company during the calendar year, €60,000 is the usual employer PRSA ceiling for that year. If the company has already contributed €40,000, the remaining room is €20,000, subject to the actual circumstances.
The company’s available profit is a separate consideration. Having €150,000 of profit does not turn that €60,000 salary limit into €150,000 of tax-efficient PRSA funding.
Two calendars matter
The employer PRSA limit follows the calendar year. The company’s deduction follows its accounting period and payment timing. Those periods may not match.
Imagine a company with a 30 June year end and a director paid €60,000 in calendar 2026. An employer PRSA contribution paid in March 2026 and another paid in November 2026 fall into different company accounting periods, but both count towards the same 2026 salary-based PRSA limit.
Check payments by calendar year and by accounting period. A worksheet built around just one of those can miss the limit or assign the deduction to the wrong period. Revenue’s pension manual, Chapter 24, includes examples.
Pay it, do not just accrue it
This is the practical point we keep raising: a pension contribution needs to reach the provider. Recording a year-end pension expense while leaving the money in the company is not the same thing.
Arrange the amount, paperwork and payment early enough for the intended deduction period. Do not wait for the Corporation Tax return and assume that payment then repairs the earlier year end. Retain evidence of the payment and the provider’s confirmation.
Revenue’s guidance on employer contribution deductions uses the payment basis and has separate provisions for special occupational pension contributions. Do not transfer a deduction rule from one arrangement to another without checking it.
What if the company pays too much?
An employer PRSA contribution above the relevant limit can become a benefit in kind for the employee. The excess also does not qualify for the company’s pension contribution deduction. Payroll and the company tax computation both need attention. Revenue’s PRSA rules explain the treatment.
Do not try to resolve an excessive contribution by labelling it an expense or changing the description in the accounts. Establish the actual payments, salary and dates, then calculate the consequences.
Personal payments and occupational pensions are different
Your personal PRSA contributions have age-related Income Tax relief limits and an earnings ceiling. An employer contribution does not use the same personal allowance. Our pension top-up guide explains the personal calculation.
An occupational pension may have different employer funding capacity, based on its rules and benefit limits. It is not an automatic workaround for every director with a low salary and retained company profit. Compare suitability, charges, access, funding capacity and deduction timing with the relevant advisers.
Pension size and access need their own check
The Standard Fund Threshold is €2.2 million in 2026. It is a limit relevant to the tax treatment of pension benefits when they crystallise, not an annual contribution allowance. Pension rights across arrangements need to be considered. Revenue explains the threshold and chargeable excess tax.
A PRSA normally becomes accessible at 60, with specific exceptions. It is not tied to State Pension age.
For a personal pension lump sum, the tax-free €200,000 limit is a lifetime limit across retirement lump sums, not €200,000 afresh for every policy. Revenue’s lump-sum guidance explains the bands. Check previous benefits before assuming the full amount remains available.
Decide the affordable contribution before the deadline
Set out the director’s salary, contributions already made, available pension capacity and intended payment date. Then test the cash remaining after tax, payroll, stock and other commitments.
We would rather see a deliberate contribution that the business can afford than a rushed maximum payment followed by a funding problem. The accountant’s tax and cash calculation and the adviser’s pension recommendation should meet in the same plan.
Our business tax accounting service is the place to discuss the company calculation. For an Irish business turning over €250,000 or more that wants tax and cash planning connected to its monthly reporting, book a Finance Fit Call.
FAQs
Not without tax consequences. From 2025, the usual employer limit is 100% of the employee’s salary from that employer in the calendar year, with specific exceptions.
No. The salary-based employer PRSA limit is a calendar-year test. Payment timing for the company deduction is a separate accounting-period question.
Do not assume an accrual secures the intended deduction. Check the actual payment date and the rules for the pension arrangement before completing the company tax calculation.
An employer PRSA payment and a personal contribution have different rules. Calculate them separately and account for other personal pension contributions when assessing personal relief.
No. Salary needs, pension access, product suitability, funding rules and the company’s cash commitments all matter. Compare the whole position rather than choosing the largest apparent tax saving.
